Federal Government Announces Over $9 Billion in New Defence Funding for 2025-26

Prime Minister Mark Carney and Minister of National Defence David McGuinty announced on June 9 that the federal government plans to increase defence spending by over $9 billion for the 2025-26 fiscal year. According to the government, this level of spending will bring Canada’s defence expenditures to 2 percent of the country’s gross domestic product.

The government outlined this funding as part of its stated plan to address a range of priorities for the Canadian Armed Forces (CAF), the Department of National Defence (DND), and the Communications Security Establishment (CSE). According to government information, the announced amounts are reported on a cash basis.

According to the Department of National Defence, $2.6 billion will be allocated to recruiting and retaining military personnel. The department has indicated an aim to increase the regular force to 71,500 members and the Primary Reserve to 30,000 members by 2030. The government reports there is currently a shortfall of 13,000 Regular and Reserve members. Some of this funding is also earmarked for the civilian workforce that supports operational readiness, maintenance, finance, procurement, and infrastructure.

The government states that $844 million is planned for the repair and maintenance of CAF equipment and for improvements to key DND/CAF infrastructure. These funds are to be directed toward land, maritime, and aerospace fleets, as well as the repair and sustainment of existing infrastructure under Phase 2 of the National Procurement Program.

The government reports that $560 million is allocated to strengthen digital foundations for the DND, CAF, and CSE. According to the Department, this funding is intended to bolster resilience to cyber threats and improve the security and management of defence information.

According to the Department, $1 billion is planned to expand military capabilities, with a focus on Arctic defence. These initiatives are described as being in line with commitments in Canada’s current defence policy and emphasizing Canadian suppliers.

The government has allocated $2.1 billion to strengthen its relationship with the Canadian defence industry. According to the Department, the funds will support the development of a Defence Industrial Strategy and focus on addressing immediate needs, such as reducing obstacles for industry to provide equipment and support to the CAF. This strategy will also seek to strengthen allied industrial partnerships and make use of joint NATO procurement mechanisms.

According to the government, $2 billion will be used to diversify Canada’s defence partnerships beyond the United States, while ongoing cooperation with U.S. partners will remain where beneficial to Canada.

Other federal departments and agencies will receive $135 million in defence-related investments for the 2025-26 fiscal year, according to the government. The government has clarified that all funding figures are presented on a cash accounting basis, with some accrual figures provided in government documents.